Equity Requirements for Refinancing

If you’re considering refinancing, you probably want to know if you have enough equity to do so. But it’s important to note that equity requirements are not uniform. You may also be surprised that your home’s value is not as high as you think it is during the appraisal process. If your initial down payment was also low, you won’t have very much equity.

Best Course of Action

You’ll want to start by talking to a loan officer from Great Northern Mortgage to estimate your home’s worth. Gather information from multiple sources to try to make the most accurate estimate.

Roughly, you want to have an 80% loan-to-value ratio, but you may be able to refinance with a ratio greater than 80%. Loan products that allow this typically require mortgage insurance that protects the lender. FHA loans are an example of this.

You should also make sure that you know how much you’ll need to pay in upfront costs (regardless of approval) before you submit an application. If you feel you’re unlikely to be approved, you may want to save the money.